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One of the characteristics of business operations is the existence of agreements. These agreements may be between businesses or between a business and an individual. Although it is possible to have oral agreements, formal written contracts are mostly used in business engagements. An employment contract is an agreement that is reached between an employee and an employer in order to ensure that the parties involved are safe and fully protected. A written contract between an employee and an employer shows clearly the obligations of each party to the contract.
Contracts can be enforced in law and help to provide guidelines on how to deal with any actions that are unacceptable. According to Cahuc et al. (327), the features of a labor contract depend on whether the results of an employee’s activity can be observed and taken into account. Both the employer and the employee have numerous obligations that must be respected and lived up to. A well-structured labor contract helps to protect both parties of the contract from questionable allegations. Drawing from a study by Wortzel (35), having a formal contract helps to prevent misunderstandings that are likely to occur for the period that an employee is engaged by an employer.
Necessity and Significance of Labor Contract for the Employee
To a large extent, a labor contract presents a negotiation process that clearly stipulates the duties of the employer and the employee with regard to the contract. For an employee, a contract serves as an assurance that he or she is working for an honest and professional employer. On the other hand, a contract gives an employer the guarantee that an employee clearly understands what is expected of him or her and has accepted to fully comply.
In many countries across the world, the labor contract more often than not favors the employee and makes sure that an employer does not subject an employee to any form of unfair treatment. Ordinarily, a labor contract is explained fully to an employee to ensure that he or she has a complete understanding of the employer’s expectation. When this is done, it gives an employee an opportunity to either accept or reject a possible engagement with an employer. The explanation also creates a chance for an employee to seek clarification about the terms of the contract in the event that they are not clearly stated.
Equally important is the fact that a labor contract stipulates the grounds for hiring and dismissal. Through a labor contract, an employee gets to know what he or she will be paid at the time of engagement. In addition, a labor contract indicates the benefits an employee is entitled to and what happens during a termination. According to Poole (237), a labor contract provides the assurance that an employer will take reasonable care of an employee economic well being in the event that he or she has to be laid off. Indicating how much an employee will be paid during the duration of engagement is useful in helping the employee to plan. An employee must be made aware of any changes to the salary structure in order to avoid any misunderstandings. The labor contract also includes information such as health cover and leave among others.
In the course of employment, it is possible that disputes will arise time and again. To ensure that these are effectively addressed and that everyone emerges as a winner, it is imperative to have a detailed labor contract. Through the contract, it is possible to lay out a solid plan for dealing with disputes encountered. The interests of the employee are thus secured. Including a proper plan for dealing with disputes will save both the employee and the employer the headache of having to go through a rigorous legal tussle and avoid any associated expenses.
A labor contract can also help to guarantee an employee’s confidentiality. As long as it is entrenched in the labor contract, disclosure of sensitive information about an employee by an employer can be avoided. This ensures that an employer respects an employee’s right to confidentiality and increases his or her morale. Subsequently, this helps to improve an employee’s level of performance. According to Gross and Compa (13), a labor contract is a useful tool for reinforcing respect for human rights at the work place.
In some cases, a labor contract indicates the agreed duration of engagement. Including the duration of the employment in the contract helps to give an employee a guarantee about the certainty of his or her employment and gets rid of any fears about unanticipated dismissal. Any changes to the contract duration by an employer must be clearly communicated to an employee and his or her input must be sought.
Another important benefit of a labor contract is that it limits the obligations of an employee. Among other things, a labor contract outlines the responsibilities of an employee. What is expected from an employee is thus clear to the employee and to the employer. This ensures that an employer does not take advantage of an employee to make him or her carry out tasks not stated in the contract. An employee can thus be at peace and expect no surprises. In addition, indicating what an employee is required to do carry out removes any form of confusion. As noted by Bergner (2218), a labor contract law must include a clause that prohibits forced labor of any nature.
A labor contract also stipulates the consideration (Mann and Roberts 214). In the event that the employer has to terminate the services of an employee, he can choose to compensate the employee in a certain manner in order to avoid being involved in legal battles. Without doubt, this can help to keep away from any unnecessary expenses. Besides, court wars consume so much time.
Without a doubt, a labor contract is very critical in a business environment. While it helps employers to ensure that work is done as expected, it is equally useful for the employee. It thus benefits both the employer and the employee. As has been discussed in this paper, a labor contract safeguards the interests of an employee in so many ways.
A detailed labor contract gives an employee the assurance that he or she is working for a professional employer who will respect his or her rights. A labor contract also guarantees fair treatment for the employee. It clearly stipulates the benefits an employee is expected to receive from the employer during and even after the contract comes to an end. In addition, the obligations of the employee can be ingrained in the contract to prevent the employer assigning responsibilities not covered by the contract.
Bergner, Jeffrey. Country Reports on Human Rights Practices for 2008: Vols. I and II: Joint Committee Print, U. S. House of Representatives and U. S. Senate. DIANE Publishing, 2008.
Cahuc, Pierre, et al. Labor Economics. MIT Press, 2014.
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Gross, James, and Lance Compa. Human Rights in Labor and Employment Relations: International and Domestic Perspectives. Cornell University Press, 2009.
Mann, Richard, and Barry Roberts. Essentials of Business Law and the Legal Environment. Cengage Learning, 2015.
Poole, Jill. Casebook on Contract Law. Oxford University Press, 2016.
Wortzel, Larry. Report to Congress of the U. S. -China Economic and Security Review Commission. DIANE Publishing, 2009.